Alright, party people. Having trouble convincing a friend, colleague, boss, executive, shareholder, customer why you need a sustainability strategy? I got you. You’ve asked and I’m here to deliver. Over the course of my career, I’ve had various meetings with colleagues, interactions at networking events, industry presentations, dinner table conversations and more on WHY organizations need sustainability strategies. Without further ado, I present to you the top 10 reasons that you can use for creating the business case for a sustainability strategy at your organization.
- Regulatory requirements. The United States has regulatory requirements (although they are few and far between) for companies selling products to customers in the US. For products sold outside of the US, such as the EU, there are more stringent requirements that must be met before going to market. I recommend researching regulatory requirements as they relate to your industry and product(s) and ensuring you’re in compliance. If you’re not, create a strategy that not only gets you in compliance but also allows you room to grow. Here are several examples to get you started:
- Want to sell in California? The California Transparency in Supply Chains Act of 2010 (SB 657) requires retailers and manufacturers doing business in California to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains. AKA if you sell your products in California, this applies to you!
- Love your necklace. Where’d you get it from? Dodd-Frank Act was created in the aftermath of the 2008 financial crisis, to oversee the more than $400 trillion swap markets. Section 1502 provision requires U.S. publicly-listed companies to check their supply chains for tin, tungsten, tantalum and gold, if they might originate in Congo or its neighbours, they must take steps to address any risks they find, and to report on their efforts. This really applies to companies like Apple’s and Tiffany & Co but if you work in the apparel industry, think zippers and metal trims. You’ll need to disclose on an annual basis the country of origin (COO) of each components you believe might have been sourced from a conflict country and your remediation plan to the U.S. Securities and Exchange Commission (SEC).
- Planning to sell collegiate product? The Fair Labor Association is a collaborative effort of socially responsible companies, colleges and universities, and civil society organizations. Currently, 145 colleges and universities such as Penn State, UCLA, Florida State University and more require the brands that produce their clothes i.e. the Nike, adidas, Under Armour’s of the world, disclose the factory and the latest social compliance audit from where that gear was manufactured. I saw firsthand at Under Armour how this requirement became a catalyst for implementing a social labor standard in UA factories in order to manufacture and sell gear in places such as University of Notre Dame’s campus bookstore.
- Still in incubation but I am watching with a close eye is Elizabeth Warren’s Accountable Capitalism Act proposal. This bill would require corporate boards to take into account the interests of customers, employees and communities. To make sure that happens, 40 percent of a company’s board seats would be elected by employees. Stay tuned…
- Increased sales. Your customer, that’s right. In 2018, Inc reports that “While 66 percent of global consumers are willing to pay more for sustainable goods, a full 73 percent of Millennials are (Millennials are defined as those born from 1977 to 1995).” Your organization’s future customer not only will pay for more sustainable goods but they expect it. The sooner you get your company’s sustainability strategy in place, the sooner you can demonstrate how having a game plan can increase sales by tapping into markets that might not have been previously possible and build confidence in your customer that you’re walking the walk and talking the talk. You can also create a more confident customer service team when answering customers sustainability questions if they know there is a company strategy in place. Lastly, there is an uptick of retail brands that are requiring sustainability standards in order to continue doing business. For example, REI launched their sustainability requirements in 2018, which require 1,500+ brands they sell on behalf of (including their private line) to adhere to. Expect to see this trend increase as retailers look for opportunities to differentiate and compete.
- Cost savings. Let’s be real. Companies that continue to forecast increased volume of goods without taking into consideration that those natural resources are depleting will be s*** out of water (pun intended) when they realize that the average t-shirt uses 2,700 liters of water (that’s a one person supply of 900 days of drinking water!). Think about how expensive those raw materials will go up as supply dwindles and demand increase. Utilizing frameworks such as the Higg Index, which is owned by the Sustainable Apparel Coalition, helps companies identify their environmental and financial impact of choosing virgin versus renewable resources for not only their products but also their owned facilities. Sustainability strategies can immediately save costs (you can tell your CFO to thank you later) but they are also an investment for future cost saving. For example, Fair Trade USA, requires you to pay the difference between a country’s minimum wage and living wage to each worker that works on your product. If you don’t think that paying workers who make your clothing a decent wage increases their daily output and reduces your lead time and quality defects in turn making you a better product and faster to a happier customer – you’re crazy.
- Positioning for long-term growth. There are a plethora of companies such as Everlane, Warby Parker, TOMS, Allbirds, Reformation, Outerknown, Christy Dawn, Cotopaxi that have sustainability built in their DNA. They are smaller and more nimble and are able to implement the latest sustainability trends such as PFC-free technology, Fair Trade capsule collections, recycled fishing nets in their swimwear… you name it. It’s no longer just about having a compelling product and story, it’s also about purpose, passion and impact you have on people and the planet. Do an exercise and map out the competitors in your company’s space and show their sustainability initiatives to your head of sales and marketing. You want to demonstrate how being proactive in creating a game plan for addressing competitors sustainability messaging will allow the company to grow in years to come even if you move on.
- Recognition. Companies such as adidas are partnering with non-profit organizations to clean up the ocean. Their collaboration in the form of an recycled plastic shoe called Parley demonstrates to the outside world that investing in sustainable options is a business driver. Campaigns like adidas’ gets sustainable blogs, influences, organization’s attention and boost their brand image and algorithms on the web.
- Industry Norm. Forget the competition for a minute. You just need to keep the status quo. When Nike was discovered using child labor in sweatshops in the 1990s they immediately implemented a code of conduct based off of the International Labor Organization. It’s become a baseline requirement in the textile industry to present your code of conduct to anyone who asks. The Outdoor Industry Association (OIA) has been creating the same war cry around using the Higg Index as a self-assessment tool on behalf of the outdoor industry. Expect this trend to continue and use that as leverage to up the ante from a one page code of conduct to a robust strategy that incorporate all components of the business and their social and environmental impacts. Collaboration in the apparel industry is key since 99% of clothing sold in the US is made overseas and not owned by the brands, which means that implementing basic sourcing and sustainability requests can only be as successful as your willingness and the other brands producing in the factory to stick to the industry norm.
- Managing up. If you’re at a company where the founder, CEO, President believe in implementing sustainability then chances are you either already have a strategy in place or you are in a good position to propose one and get their buy-in. If you’re not, then polish off your schmoozing skills and cozy up to the decision makers in your company. Ask them what their views are on sustainability and what they would like to see moving forward. Use that insight to help build the business case for your company and build a strategy from there.
- Employee retention. Do you know how much it cost to onboard a new employee? In the thousands. Ensuring your company is staying up to date with trends in your industry and the market is an investment in your employees in ensuring higher productivity and lower turnover. A transparent and formal sustainability strategy creates trust within your organization. A company that does this well and open sourced their strategy is Outerknown.
- A PR crisis. I’m including this close to the bottom of the list because I believe it is a reactive response to creating a sustainability strategy. However, it is a reason so I am compelled to include it. For example, the collapse of Rana Plaza in 2013 immediately created alliance and strategies between global retailers and Bangladeshi trade unions around fire and structural safety. As with any crisis, having a strategy in place reduces fear of the unknown and reduces risks.
- It’s just the future gosh dang it. The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all countries – developed and developing – in a global partnership. They recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. Many United Nations Member States have adopted this sustainability framework for their country. The United States is not far behind and the sooner we create proactive strategies instead of reacting each time there is a trend or crisis, the sooner we can stop contemplating the WHY behind needing a sustainability strategy and actually start implementing to see the impact.
My next blog edition will go in depth on all of the different definitions of sustainability. In the meantime, got a burning suggestion that you think I missed? I’d love to hear from you. Click here to send me note or fill out my new client quiz if you’d like to work together.